Fox Executive Plans to Start Production Unit

By BILL CARTER

Published: January 6, 2004

Sandy Grushow, the longtime head of both the entertainment division of the Fox television network and production studio announced yesterday that he was leaving to start his own television production unit under the Fox studio.

Mr. Grushow had a four-year contract that was to continue until this summer. But both Mr. Grushow and an official Fox statement said that he had made the decision to leave now, after consulting with Peter Chernin, the chairman of the Fox Group, a division of the News Corporation that operates the company's television and movie businesses. One senior executive close to the negotiations said Mr. Chernin had decided that the time was right to make a change.

Although Mr. Grushow led the Fox network to new prime-time ratings heights last year, on the strength of ''American Idol'' and ''Joe Millionaire,'' Fox has had less success so far this season. In a recent interview, News Corporation's chairman, Rupert Murdoch, had expressed disappointment in the network's season to date.

Mr. Grushow, who held the position of chairman of the Fox Entertainment group since 1999, will not be replaced. His responsibilities will be filled by Gail Berman, who is president of the Fox network entertainment division and Gary Newman and Dana Walden, who jointly run the production studio, 20th Century Fox Television. They will report to Mr. Chernin, who will take a more active hand in the television side of the business, according to executives at the network. The changes are effective immediately.

Under Mr. Grushow, the Fox network reached a high point last season. For the first time in the network's history, it won two ratings ''sweeps'' months -- special ratings periods that set advertising rates for the subsequent quarter. Fox also for the first time came close to winning the ratings race for an entire season among the 18-to-49-year-old audience that Fox, NBC, and ABC consider the benchmark of television success; Fox finished a close second to NBC.

The Fox studio also became one of the most successful in Hollywood under Mr. Grushow's leadership, making an estimated $400 million in profit last year, on the strength of series including ''The Simpsons'' and ''24.''

But last season's ratings had evidently raised expectations within the News Corporation for more of the same this season. Instead, many new Fox programs faltered this fall, including ''Skin'' and ''The Next Joe Millionaire.'' The network will need a dominant final five months if it is to claim its first ratings title in the 18-to-49 competition.

Mr. Grushow, who is 43, said he was sure the timing of his departure would surprise some people, because he was leaving just as Fox was hoping for a ratings takeoff. Another series of ''American Idol'' is to begin in two weeks.

But he said that with his contract coming to an end this summer, he had to decide now whether to consider continuing to run the television operations at Fox for four more years or whether to seek some new direction in his career.

''After doing this job for four years,'' Mr. Grushow said, ''I thought it was time to try my hand at something else that I've always wanted to try.''

Mr. Chernin declined to comment. In a released statement, he praised Mr. Grushow's contributions to the network and the studio and said ''as much as I would have liked to continue to work shoulder to shoulder with Sandy as an executive, I certainly respect his decision.''

The senior executive close to the negotiations, though, said that ''the decision to leave was Sandy's, but he had some help from Peter.'' The executive said that Mr. Grushow's contract dealings were handled entirely by Mr. Chernin and that Mr. Murdoch did not in any way order a change at the network.

One executive who has worked closely with Mr. Grushow for many years noted that his decision to leave might have been influenced by recent statements by Mr. Murdoch that he intended to fill the top jobs at his company with one or more of his three children.

''Sandy is a very ambitious guy,'' the executive said. ''But in this company there was always a limit to where he could go. It's a family business, and he's not in the family.''

Stepping away from Fox now means that Mr. Grushow can be considered immediately for other executive positions in the entertainment industry, rather than having to wait for his contract to expire.

The Fox entertainment division in the last decade has been characterized by frequent change. Mr. Grushow himself had an earlier tenure running it, from 1992 to 1994, before being forced out and replaced by a series of executives.

He rejoined Fox as the head of the television studio in 1997 -- a time when few Fox-produced programs were on the air and the studio was only marginally profitable. Under Mr. Grushow, though, the studio has made about $1.5 billion in profits over the last seven years, headed by shows liked ''The X-Files,'' ''The Simpsons,'' ''Ally McBeal,'' and ''The Practice.''

It was after the Fox network had a ratings downturn in 1999 that Mr. Grushow took on the added duties of leading the network's entertainment side while continuing to oversee the studio. That move toward direct vertical integration of network and studio had already been made by ABC and the Touchstone studio owned by its parent, the Walt Disney Company.

Sam Haskell, the head of Worldwide Television for the William Morris talent agency, said he expected Mr. Grushow to be successful as an independent producer because ''he understands the buying and selling business as well as anybody, and he's really good at what he does.''

But he added that he expected Mr. Grushow might not last long as a free agent in the entertainment business. ''I think he will be offered jobs in this ever-changing carousel, because people like him and recognize what a good job he did at Fox,'' said Mr. Haskell, who does not represent Mr. Grushow.

Mr. Grushow himself said: ''There will be a tremendous amount of change in the business over the next few years. I like where I sit.''

In the short term, he said he expected to set up a production office for his new company, called Phase Two, on the Fox studio lot, with five or six executives working under him; 20th Century Television would have an ownership stake in all Phase Two productions. Mr. Grushow said he would concentrate on developing both comedy and dramatic shows for television, with a eye toward moving into theatrical films in the longer term.

He said he intended to focus especially on ''changes that are desperately needed to keep the broadcast business viable.'' That means, he said, finding ways to produce shows at lower costs and pilots for shows that may be in the form of shorter presentations of 10 minutes rather than a full half-hour or hour.